The Synergistic Organization

August 23, 2019

A key question for an organization post-M&A is: “What organizational capabilities support global guidance and leadership, and which of them require these at the 'local' level?” Scott Hull discusses potential solutions.

There is no denying the consolidation of companies in the pharma/bio industry. From 1996 to 2011 (16 years) there was approximately $776bn in M&A activity, while in the last eight years this amount has been exceeded in half the time ($892bn). 

It’s unquestionable that the dollar value and pace of M&A has increased. The reasons for M&A vary but include:

  • Inversion motivations.

  • Cost and timeline associated with R&D.

  • Changing landscape of “blockbuster” products.

  • Organizational dynamics and motivations to place calculated bets on companies with drug candidates.

  • Legislative landscape has directed certain behaviors as companies look for targets of opportunities.

  • Payer dynamics.

  • Sophistication in modeling approaches.

The reasons for M&A activity are worthy of further investigation, and indeed they have been. But limited attention has been paid to what the new organization needs to look like post-M&A. Key questions that new organizations struggle with arise as they map out the new company.  One such question is: “What organizational capabilities support global guidance and leadership and which require these at the 'local' (regional [APAC, AMEA] or even country) level?” All sales success occurs locally as each local market possesses uniqueness, yet there are several opportunities where organizations can optimize this success through maintaining a global organizational presence. 

The world is flatter than local organizations want to admit

In my career, having traveled more than 50,000 air miles across several continents in the context of training users on process and software to support salesforce effectiveness, I found the need to substitute training material to account for local market dynamics less important than providing the proper context to the documentation I already had. Some local organizations think their markets are so unique that it would be impossible for a global organization to provide insight and structure effectively. But my experience shows that a global organization can provide the framework and structure, while the local teams fills in with context. Local organizations can sometimes feel that a global “Big Brother” may be a threat to their autonomy or to their headcount. But if done right, both can prove invaluable to each other.  

Additive, synergistic, antagonistic

There are three types of interactions between medications: additive, synergistic, and antagonistic. The same can be said for commercial organizations. Additive interaction means the effect of two chemicals is equal to the sum of the effect taken separately. Synergistic interaction means that the effect of two chemicals taken together is greater than the sum of their separate effect at the same doses. Antagonistic interaction means that the effect of two chemicals is actually less than the sum of the effect of the two drugs taken independently of each other. Post-M&A, the new organization must be mindful of the interaction their efforts are creating, specifically within key departments. The way an organization structures certain functional capabilities seems to support one of these interactions (intentionally or otherwise) in some cases at the expense of the remaining two interactions, creating a result that may seem effective at first but is strategically less effective and in fact detrimental over time.

Concentrating on organizational structures that are more synergistic is more productive. Illustrating the power of collaboration through organizational, system and framework design supports better solutions and local success. An excellent example of this is to provide frameworks that can be used to guide strategy. There are most likely numerous examples already available within organizations to use as reference, even if they may not realize it. 

A rose by any other name...

Roses come in all sorts of varieties but they share much in common, which connects them as a genus. The same can be said for analytical frameworks. While local market data assets are often unique, they can be aided by the application of a controlled approach. These frameworks are not a new phenomenon, but memories can, at times, be short lived as our industry is in a constant state of churn and turnover. It is possible, however, to develop standards that in turn can be uniformly applied to business process and analytics with informed intuition from local market experts. A great example of this is a Go-To-Market approach. By applying a connected framework as guidance that is implemented at the local level with informed assets, we ensure the right questions are being asked. 

Simplified elements of a Go-To-Market (aka Marketing Plan) can be defined as:

  • Where are we?

  • Where do we want to be?

  • What will we use to get there?

  • How much? By whom? By when?

Common insights within the context of the establish framework can be an output resulting from application of data and local market in the implementation of the framework. What makes frameworks work is discipline to train to the standard, flexible models as well as the sponsorship to implement them across the organization. 

Not Command and Control, but Communication and Collaboration

In the military, the command structure also defines the control structure, thus, the term “Command and Control.” While this structure is necessary to implement often complicated missions, businesses of today demand a less formal dictatorial approach, one that is more collaborative and relies on influence without authority. Instead of implementing orders, we need to implement a playbook by collaborating to generate a solution that is supportive of the overall process yet unique enough to apply to local markets. There are certain capabilities that are best suited to provide this type of shared framework with local input, and do so using collaboration and leadership.

Global Customer Excellence (GCE)

Typical customer excellence functions serve as a unifying catalyst to define frameworks for how organizations should perform:

  • Segmentation.

  • Targeting.

  • Salesforce sizing.

  • Go-To-Market approach.

  • Customer Relationship Marketing (CRM) utilization.

  • Unifying Key Performance Indicators (KPI’s) .

  • Incentive Compensation design.

  • Forecasting.

GCE brings standard best practices from the afore mentioned process to bear for local organizations and act as consultants within each market. The framework they provide is built like a Gant Chart with milestones and gate reviews illustrated. The local geography (e.g. country or region) would provide the specifics of the project plan which includes the dependencies unique to their marketplace. The GCE would serve as a moderator to keep the process on track with overall organizational strategy while allowing and, indeed, depending on the local market to exercise sustainable leadership. The response to each process will be guided by the GCE but rely on local market expertise to steer the project. Yes, differences between markets vary to include: product aggregation, regulatory influences, reference data availability and accuracy and reliance on legacy systems/process that have yet to be updated. However, similarities in the overall approach to solutions can be shared, bolstered and improved by collaborating.   

Global Data Architecture and Governance

In the Wild West, one relied on one’s own brains and brawn to survive. Responses to problems were personal and had little concern for the well-being of others. In the corporate world, this approach can be expensive and counterproductive. A Global Data Architecture and Governance process produces standards in order to control the “cowboys” from making redundant and disconnected investments. Yet it is possible to provide the structure so local geographies can still feel involved. For instance, reference data purchases may vary by necessity, but attribute management can be governed and should be in order to sustain the highest data quality possible in order to support other business processes in Sales, Operations, Finance, Marketing, etc.

Global HR

People management, some say, is an anachronism, while others may consider it an oxymoron. Nonetheless, there is some value global HR can provide from a system perspective (e.g. PeopleSoft). These systems can be managed centrally and configured to meet local needs. The systems not only serve as inputs but deliver outputs to other systems. Establishing a central source of management people creates a system of record that feeds other systems. 

Global Marketing

The digital world has changed marketing. Some companies have established a repeatable process on how every product introduction was managed throughout their pre-launch and launch cycle. The intent was that it was to be implemented as a global standard. But too often local entities veer away from these processes. They create a new html format for websites and purchase and maintain redundant systems for managing digital assets amongst other inefficient practices. Today, the digital experience also means such things as controlling and influencing your product and corporate image, establishing consistent branding, measuring image quality and frequency as well as, when possible, patient engagements. Global Marketing can and should provide this framework with input from local organizations in order to reflect their marketplace. Technology has advanced to allow synergies to take place yet go underutilized.

Global Finance

We can all recall instances where standards needed some semblance of consistency in order to be applied universally especially in publically traded companies. Global Finance is the holder of these standards who depend on local markets to make the necessary adjustments to meet local requirements and ensure that these are considered in their respective ERP and incorporated correctly into ETL systems. There are also numerous examples where decentralized forecasting has resulted in such problems as: version control issues, model dependency mapping is practically non-existent and outdated models are in use. However, there are cautions to be sensitive to as well when considering consolidation in forecasting expertise. For instance, not consulting local market experts early enough when doing strategic forecasting. There is a risk that a central effort applies assumptions too broadly at a country level and does not consider how assumptions vary by geography within a country. Canada, for instance, has 10 provinces whose population demographics vary dramatically.  By consulting with local Canadian market experts early it should be possible to account for this more effectively in forecast models. 

Global Analytics

In philosophy, Occam’s Razor is the idea that more straightforward explanations are, in general, better. That is, if you have two possible theories that fit all available evidence, the best theory is the one with fewer moving parts. However, time and time again we see examples of analytics projects that are unnecessarily overcomplicated. Motivations for the choices vary but usually point to a person, a small group of people or a vendor demanding to re-engineer something to demonstrate their value (or charge more) vs. just implementing an 80% solution and moving on to the next business question. Analytic frameworks empower quicker decision making and ensure process standards are followed. A global analytics function establishes frameworks that can be implemented across businesses and even countries. In addition, staffing data scientists at each respective layer is neither cost effective nor efficient. Getting a group of data scientists who each have different department/product responsibilities together to agree on a single approach is disaster waiting to happen. There are too many items lost in translation. They tend to debate methodology ad nauseum in what has been termed as “analysis paralysis.” When this occurs, it not only impacts the method but the method’s implementation and application as well as the dependability of the overall story attempting to be told.  The story becomes muddled and confusing.

What is stopping synergistic organizational design?

Global capability guiding local responses can and have been approached with a healthy level of cynicism and in some cases, it is deserved. 

  • Local organizations are afraid of what transparency may uncover.  

  • They are worried that collaboration will create change that they would not have influence on.

  • Global organizations may have in the past not proven to be collaborative but more dictatorial.

  • Legacy systems are so imbedded they resist any change that challenges them.

  • Being good is the enemy of being great.  

  • Let local define success. Did you ever meet a Product Director who consistently under forecasts so the team would overshoot expectations, even when the data says otherwise? This is not an uncommon occurrence but was driven by selfish motivations rather than controlled data driven processes. In fact, any efforts to challenge a forecast with robust data and scientific methodology were met with an aggressive negative response. 

  • Bullies: We have all met them. Identify and get rid of them. Bullies approach business challenges from their own agenda. They are not servant leaders and care more for how outcomes impact them vs. the organization as a whole. 

“Global” is a six-letter word but some see it as a proverbial “four-letter threat.” However, global organizations can provide framework, consistency, quality, increased profits and maximized OPEX. Certain global shared services, such as the ones mentioned, should have a considered place in organizations versus the creation of duplicative capabilities across multiple geographies. Centralized process with decentralized input that is frequent and early is preferable to allowing unregulated and uncontrolled process and methods. 

About the author

A veteran of the pharmaceutical industry, Scott Hull was most recently a Director of Advanced Analytics for a Top 10 pharma company. He is currently pursuing his Master’s in Applied Business Analytics at Boston University.